Vapor Hub International Inc (OTCMKTS:VHUB) Affected by Panic Selling
OTC pot stocks took a heavy blow during yesterday’s session. Although, generally speaking, Vapor Hub International Inc (OTCMKTS:VHUB) isn’t one of the so-called “pure play” marijuana companies, it too took a massive nose dive.
More than 1.9 million shares changed hands resulting in a dollar volume of around $1.1 million. The ticker opened the day at around $0.84 and remained relatively stable throughout the first half of the session. Around 12PM, however, it started sliding and when the closing bell rang, it was sitting at just $0.50 (nearly 40% below Wednesday’s close). So, what caused the horrific sell-off?
The prime suspect is Growlife Inc (OTCBB:PHOT)’s temporary suspension order which came around just minutes before the opening bell. As you probably know, PHOT was considered by many to be one of the most solid marijuana ventures on the OTC markets and the fact that the SEC has “concerns regarding the accuracy and adequacy” of the information that they have provided has certainly raised some doubts in the minds of investors. This, in turn, led to double-digit drops for major cannabis-related tickers like Terra Tech Corp (OTCMKTS:TRTC), Tranzbyte Corp (OTCMKTS:ERBB), and AvWorks Aviation Corp (OTCMKTS:SPLI). But is this alone enough to cause such a massive drop for VHUB?
After all, we mentioned a couple of weeks ago that after the merger with Vapor Hub, Inc, the company seems to be doing well. The balance sheet, though not perfect, tells us that on December 31, 2013, VHUB had around $46 thousand in working capital and a positive bottom line for the second half of last year.
What’s more, they recently announced another acquisition and reported record monthly sales for March. They also appointed a new CEO who, if the 8-K is to be believed, “brings over 25 years of professional expertise to our company”.
His name is Andrew Birnbaum and VHUB tell us that he has previously been at the helm of a public company called Systech Systems Intl (OTMKTS:SSYT), a golf equipment manufacturer called Sonartec, and an unnamed e-liquid enterprise. The thing is, if you do a bit of digging around, you’ll see that this is not much of a CV.
SSYT, for example, is a double-zero stock that has never filed a financial report. Predictably, trading is not particularly exciting.
Sonartec, is a more curious case. It was indeed a golf equipment enterprise and, judging by forums and message boards, they had some decent products. This article suggests, however, that due to poor management and some legal battles between the people steering the company, it didn’t have the chance to make a real impact on the market.
The article doesn’t mention Mr. Birnbaum’s name, but it does tell us that one of Sonartec’s co-founders is called Peter Pocklington – a somewhat controversial figure. There is a whole Wikipedia entry dedicated to him and it says that he has had plenty of brushes with the law during his time. He was also apparently involved with some penny stock companies like Bonanza Goldfields Corp. (OTCMKTS:BONZ).
Will this affect VHUB‘s stock performance? We can’t be sure. We do know, however, that if the 30 million shares that we mentioned in our previous article hit the open market, the ticker is in for another crash.
Treading very carefully and doing a lot of due diligence is absolutely essential.